Putin's claims fuelled deepening tensions, with Moscow expelling German and Polish diplomats in tit-for-tat reprisals - an echo of the old Cold War - as the West accuses Moscow of arming separatists in eastern Ukraine and deploying Russian forces. Last week columns of Russian tanks, artillery and soldiers crossed into the region, suggesting a two-month-old ceasefire may collapse. The conflict has claimed over 4100 lives, including 298 killed when Malaysia Airlines flight MH17 was shot down, allegedly by separatists using a Russian supplied missile.
At the same time there has been a sharp increase in close encounters between Russian and Western aircraft and warships. According to the European Leadership Network, a non-partisan think tank, "highly dangerous actions" that happen "on a regular basis over a very wide geographical area" have soared.
The ELN report details 40 "sensitive incidents" this year. They include a near-collision between an SAS 737 carrying 132 people and a Russian military plane with its transponders switched off; a simulated Russian cruise missile attack on the US and Canada; a mock Russian bombing run over the heavily populated Danish island of Bornholm; "foreign underwater activity" - thought to be a Russian submarine - in Swedish waters; and multiple close calls between Russian and US or Nato warplanes in international airspace, up three-fold since last year.
"Even though direct military confrontation has been avoided so far," warns the report, "the mix of more aggressive Russian posturing and the readiness of Western forces to show resolve increases the risk of unintended escalation and the danger of losing control over events."
The "volatile standoff" between nuclear-armed forces is "risky at best", said the ELN, and "catastrophic at worst". Little wonder that former Soviet leader Mikhail Gorbachev, speaking at the 25th anniversary of the fall of the Berlin Wall, warned, "The world is on the brink of a new cold war. Some are even saying that it's begun."
He said the West, notably the US, had "succumbed to triumphalism". Perhaps expressing Russian resentment, he said "Putin protects Russia's interests better than anyone else".
In Francis Fukuyama's "end of history" theory, liberal democratic capitalism inevitably triumphed. It hasn't worked out that way. Chaffing at perceived US hegemony, economically weak, yet determined to resurrect Russian power, Putin seeks to dominate the "near abroad", ex-Soviet satellites, via the nascent Eurasian Economic Union or by brute force. In August, the European Council on Foreign Relations said Russian aggression, annexing Crimea and intervening in eastern Ukraine, was "a direct challenge to Europe and the West as a whole".
The implicit question was how would the West and the European Union respond? For while Russia cannot match Western economic prowess or Nato's conventional weaponry, its ace is its nuclear arsenal. In August, Putin told Duma politicians he intended to "surprise the West with our new developments in offensive nuclear weapons about which we do not talk yet".
Russian analyst Andrei Piontkovsky stoked apocalyptic fears by speculating Putin might launch a nuclear strike against a Polish or Baltic city to test Nato's resolve, on the basis the Cold War doctrine of Mutually Assured Destruction had lapsed.
Such fears are fed by retaliatory sanctions over the Ukraine. Russia, with oil and banking barred from capital markets, has arguably fared worse, plagued by capital flight, under-investment, scarce credit and a plunging rouble. Falling oil prices - Brent crude barely topped US$78 a barrel this week, bad news for Russia which gets half its budget revenue from energy taxes - have not helped.
After he became President in 2000, amid soaring oil prices, Putin sought closer integration with the West, joining the World Trade Organisation. He became a player in the G8 and G20. When sanctions were imposed Russia was dropped by the G8 and a planned Sochi summit in June was axed. It is noticeable, however, that Russia's fellow BRICS states - Brazil, India, China and South Africa - abstained in March when the United Nations denounced Russia's Crimean annexation. Putin sees BRICS as a counterweight to the West. He has also turned eastward.
While Europe remains a vital energy market, Moscow has inked a US$400 billion ($508.8 billion), 30-year deal to supply Siberian gas to Beijing. Besides giving Russia capital to develop its energy sector, it complicates matters for Washington, torn between containment or engagement. On the one hand the US, already angry Moscow gave NSA whistleblower Edward Snowden asylum and helped arm Syria's Assad regime, has called for Nato to spend more on defence. On the other, the US and Russia both want to combat terrorism. And American firms hope to exploit Russian oil and gas. Will Putin's China pivot dash such expectations?
"Ukraine is not a cause, but a symbol of the serious and deepening crisis between the US and Russia," writes Carnegie Moscow Centre director Dmitri Trenin in Global Times.
"Essentially, Russia, in dealing with Ukraine, has broken out of the US-dominated international system. Moreover, it has materially challenged the global order that the US strives to uphold."
But the world order was never a done deal. Cold War distrust always lingered. Democratic values remain anathema to Russian authoritarianism and vice versa. And today's freeze hardly approaches the half-century, worldwide stand-off between the US and Soviet blocs. In a multipolar, global economy nations pursue their own interests.
Neither side seems likely to back down. Trenin believes the crisis may prove more volatile than the Cold War, as it "lacks agreed, if unwritten, rules, is characterised by gross asymmetry in power, and is utterly devoid of mutual respect. There is also a near-universal lack of strategic thinking". With US-Russian relations in the deep freeze, and polar levels of dislike between Putin and Barack Obama, there is no certainty, warns Trenin, the crisis will stay cold.
The Sino-Russian gas deal is also a geopolitical game-changer. Putin's pivot is a counterbalance to Washington's Asia-Pacific pivot, as Beijing protests the US is sending the "wrong signal" in regional territorial disputes. Putin and Chinese leader Xi Jinping, both authoritarian rulers, may seem to have much in common. But the gas deal underscores the disparity between their countries. While China is Russia's top trading partner, Russia is tenth on China's list. The US is number one. Some Russians fear their country may become a Chinese vassal state. If Ukraine is a game-changer, China may be the ultimate winner.
